Investors have led a pick up in Australian home loan approvals as they continue to take advantage of low interest rates and solid house price growth.
The number of home loan approvals rose 1.6 per cent in March, beating economists' expectations of a one per cent rise, official figures showed. Total approvals hit a seasonally adjusted 54,686 in the month, up from 53,811 approvals in February.
The data was boosted by a surge in investor housing loans, which were up 6.4 per cent, to a total value of $12.9 billion.
That more than made up for a 3.3 per cent dip in the investment category the previous month. UBS economist Scott Haslem said the home loans data had surpassed expectations.
"Loans are still broadly consistent with ongoing solid house price growth ... and also no longer on a path of further slowing," Mr Haslem said.
"Looking forward, the RBA's May rate cut should provide a further boost to demand, and given the likely ongoing strength of housing, we continue to expect the RBA to hold rates at two per cent ahead."
RBC Capital Markets fixed income and currency strategist Michael Turner said the strong investment reading was a turnaround from earlier in 2015. He said it looked like investors had not been put off by a reminder from the Australian Prudential Regulation Authority (APRA) on guidelines for prudent mortgage lending practices.
"Relative to at least our expectations, the noises from regulators as of Q1 were perhaps not that influential," Mr Turner said.
According to the data, the value of total housing finance rose 3.5 per cent on a monthly basis to $31.62 billion in March.
The number of loans for the construction of dwellings was down 1.8 per cent, but this was offset by an increase in loans to purchase new dwellings (up 2.9 per cent) and for established dwellings (up two per cent).
Commonwealth Bank of Australia economist Michael Workman noted that refinancing was also playing a a major role in the lending market at the moment.
He said refinancing now comprised about 34 per cent, by value, of all the loans to owner-occupiers.
On a state-by-state basis, owner-occupier approvals were up across all the major states.